Generally, any multi-storey residential building is called an “apartment”. However, more and more terms are being thrown about to describe what is traditionally called an apartment: condos, serviced apartment, SOHO, SOFO, SOVO and etc. This result is that terminology between apartment, condominium and serviced apartment has been distorted over the years.

A condominium is an apartment that has facilities such as a swimming pool, gymnasium, multi-purpose hall, etc. While an apartment or a condominium that is built on commercial land is differentiated with the term serviced apartment.

So, what are the differences between a condominium and a serviced apartment? Read on to find out.

Serviced apartments are charged commercial rates for utilities (i.e. electricity, water, sewerage, etc.) due to their land status. The rates are typically much higher than the rates for residential land titles. As such, the deposits imposed by utility companies are much higher. A serviced apartment will be categorized as low voltage commercial premises and will be charged RM7.20 minimum a month. A private residential dwelling will be capped at a minimum of RM3. Although in most cases, developers do try to work around this by negotiating with the respective utility companies for lower rates, they may or may not be successful.

Different maintenance fees

Due to higher rates for everything in serviced apartments, the monthly maintenance charges will be much higher for serviced apartments and are also evaluated at commercial rates.

Different tax rates

Assessment charges and quit rent for serviced apartments are also calculated at commercial rates, which again, are typically higher than the residential rates for condominiums. Although you can take comfort in that there is no difference in other tax rates such as income tax or real property gains tax.

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Different environments

Condominiums are usually designed for privacy. Security is a big feature of residential condominiums, and the flow of people in and out of the property is controlled.

Serviced apartments, however, are built on commercial land. Thus, most of them will be attached to adjoining shopping malls or retail outlets, usually as part of an integrated or consolidated development. Residents will thus have no control over the types of businesses that are opened, and the flow of non-residents in the area will substantially increase. However, with the multitude of commercial amenities that come with a serviced apartment, you will be living a life of convenience. You can just hop onto a lift from your home upstairs to go downstairs for dinner or a movie. Do take note that not all serviced apartments are attached to commercial complexes. Sometimes, they are standalone residential units, but their land statuses have been converted to commercial.

Different allowable population density

A condominium built on residential land is built based on units or population per land size. Serviced apartments, however, are based on plot ratio. This is the total built-up area per land size. This allows developers to increase the maximum number of allowable units (or the population density) for serviced apartments. This will be much more compared to a condominium situated on the same land size.

Here’s the math. For example, if a developer is granted the land to build a condominium based on a population of 1000 people per acre, and assuming that 5 people live in a 1,000 square foot unit, the maximum number of units the developer can build per acre of land is 200. For a serviced apartment granted on the same piece of land, the population will be based on a plot ratio of 1:10. The developer will be allowed to build up to 440,000 square feet. Now, this would mean that the developer can easily increase the maximum number of units to 400 units of 1,000 square foot apartments.

Which is worth it?

At the end of the day, whether you are better off with a condominium or serviced apartment boils down to your personal habits and lifestyle, as well as your own goals for purchasing the property. If you like the convenience of amenities right below your doorstep, perhaps a serviced apartment suits you most. If you value your privacy and prefer a quite environment as a place to call home, a condominium will surely be the way to go.

If, however, you desire to turn it into a rental unit, then you would have to be clear of the target tenants you want to market your property to. Then it would be a case of the location, amenities and proximity to hotspots. Thus, in these cases, issues such as the difference in utility charges and assessment charges will be of less concern.

Whatever choice you make, it is vital for you to make an informed decision. The rule of thumb is to always, always research your property thoroughly before embarking on a purchase. Make sure you look through the sale and purchase agreement and understand all facets of the property clearly. You wouldn’t want to be shocked when you purchase an apartment unit in an ideal quiet place, only to be shocked when you discover that the land title is “commercial”.